GORDHAN BECHARBHAI v. AMRELI MUNICIPALITY — 1977 DIGILAW 129 (GUJ)

S. H. SHETH, J. ( 1 ) THE petitioners challenge in this petition the resolution passed by Amreli Municipality on 18th June 1917. The petitioners are businessmen. They were occupying cabins at Amreli on municipal land. The municipality had issued to them licences to occupy those cabins. The municipality earlier resolved on 30th April 1972 to construct shops and to give them to the petitioners on payment of cost of construction and the rent as determined by the Consulting Engineer. It provided for giving shops for 10 years with an option to the lessees to have the lease renewed for 10 more years. Some of the petitioners and others challenged that resolution in Special Civil Application No. 1189 of 1912. They contended that the resolution was ultra vires the statutory power of the municipality. On 15th December 1972 this Court upheld the contention raised in that petition and recorded the finding that the resolution dated 30th April 1972 was ultra vires the statutory powers of the municipality. On 7th September 1976 the occupiers of the cabins met the municipal and governmental authorities and they entered into an agreement in regard to the cabins to be constructed. Pursuant thereto on 18th July 1977 the municipality passed the impugned resolution. ( 2 ) THE impugned resolution provides that the municipality shall construct shops as early as possible which will be given to the occupiers of the cabins. Next the shops will be constructed on a priority basis. The occupiers of the cabins who are given the shops shall pay premium cost of construction and other charges as determined in the resolution. Laying down the details of this plan the resolution provides that every applicant shall pay Rs. 1 0 along with his application shall pay 33% of the estimated cost towards the first instalment as soon as the construction reaches the plinth level The second instalment of 33% shall be payable when the construction is completed The third instalment shall be payable when possession of the shop is handed over to the applicant. The resolution further provides that if any one fails to pay in the terms stated above his right to have a shop allotted to him shall be forfeited to the municipality. The resolution further provides that if any one fails to pay in the terms stated above his right to have a shop allotted to him shall be forfeited to the municipality. It next provides that in case an applicants right is forfeited to the municipality the municipality shall have the right to allot the shop to any other shop-keeper or cabinman. The resolution further provides that no rent of any type shall be chargeable during the period of 10 years. ( 3 ) IT has been contended by Mr. Vakil that what the municipality does by implementing the scheme incorporated in the impugned resolution is to charge the cost of construction and 60% of the development charges as a condition precedent to allotment of the shops and that under the statutory power concerned upon the Municipality the municipality cannot do so. In this context it is necessary to refer to sub-sec. (1) of sec. 208 on the Gujarat Municipalities Act 1963 It provides as follows:the municipality may from time to time open or close any public market or slaughter house. It may also either lake stallage or other rents or fees for the use by any person of any such market or slaughter house or from time to time sell by public auction or otherwise the privilege of occupying any stall or space in or of otherwise using any such market or slaughter house. It has been argued by Mr. Vakil that the municipality is a statutory body and that it cannot act beyond the limits of its statutory constitution Relying upon sub-sec (1) of sec. 208 he has argued that if a municipality constructs a building and lets out the shops or stalls therein it can charge only (i) stallage (ii) rents or (iii) fees. According to him it is not open to the municipality to retain with it the ownership of the shops and to let them out on charging the entire cost of construction plus a part of the development charges. He has in that behalf relied upon the decision of this Court in Babubhai Khandubhai Desai and Ors v. Amreli Municipality 14 G. L. R. 662. It was a case against Amreli municipality itself and the question of construing sub-sec. (1) of sec. 208 of the Gujarat Municipalities Act arose therein. He has in that behalf relied upon the decision of this Court in Babubhai Khandubhai Desai and Ors v. Amreli Municipality 14 G. L. R. 662. It was a case against Amreli municipality itself and the question of construing sub-sec. (1) of sec. 208 of the Gujarat Municipalities Act arose therein. The principle which has been laid down in that decision is that the municipality cannot permit the use of a public market on terms other than those specified in sub-sec. (1) of sec. 208 It has been observed in that decision that it is not open to the municipality which is a creature of the statute to travel outside the four corners of sub-sec. (1) of sec. 208 so far as public markets are concerned and seek to charge any sum not authorized be sub-sec. (1) of sec. 208. In that context it has been observed that what sub-sec. (1) of sec. 208 authorizes is to charge stallage other rents or fees for the use by any person of such public market or consideration for the sale by public auction or otherwise of the privilege of occupying any stall or place in or of otherwise using any such public market. ( 4 ) MR. D. U. Shah who appears on behalf of the Amreli municipality has argued that the impugned resolution does not fall within the mischief of sub-sec. (1) of sec. 208. According to him what the municipality does is either to charge rent or to sell otherwise than by public auction the privilege of occupying the stalls or shops in the market. In that context he has invited my attention to the impugned resolution which states that no rent shall be payable for a period of 10 years. According to him what the municipality does is to charge in advance rent for a period of 10 years which will be equivalent to cost of construction and 60 of development charges incurred in respect of these shops. In the alternative he has also argued that what the municipality does is to sell otherwise than by public auction the privilege of occupying the shops for a period of 10 years. According to him what therefore the municipality does is duly authorized by sub-sec. (1) of sec. 208. In reply Mr. In the alternative he has also argued that what the municipality does is to sell otherwise than by public auction the privilege of occupying the shops for a period of 10 years. According to him what therefore the municipality does is duly authorized by sub-sec. (1) of sec. 208. In reply Mr. Vakil has argued that sale means an outright sale and that there cannot be a sale for a limited period and without parting with the ownership. He has also argued that what the municipality does by the impugned resolution is not to grant a lease for a period of 10 year. It cannot be disputed or gainsaid that those to whom the share in question are allotted will have no liability to pay the rent for a period of 10 years. It is difficult to imagine that a public property which belongs to a municipality will be permitted to be occupied without ckarging anything. The question therefore which arises from consideration is whether what the maximum does he the imposed resolution is the charge rent or to collect the cost of construction The next affect of this allegation is whether what the municipality does is to sell otherwise than by public auction the privilege of occupying shops. In my opinion what the municipality does by the impugned resolution is to sell at a fixed price the privilege of occupying the shops for a period of 10 years. Sale which conveys ownership is known to the Transfer of Property Act. But the Legislature may provide for other types of sale. What the Legislature has done by sub-sec. (1) of sec. 2 (18 is to provide for selling either by public auction or otherwise for a limited period the privilege of occupying an immoveable property. I am unable to accede to the argument raised by Mr. Vakil that since the concept of sale as defined by the Transfer of Property Act is not incorporated in sub-sec. (1) of sec. 208 sale by public auction or otherwise as the privilege referred to in sub-sec. (1) of sec 208 is not the sale but something else. In conceivable cases there may be a distinction between rent on one hand and the consideration for sale of the privilege of occupying a shop or a stall on the other hand. In the instant case I find none. (1) of sec 208 is not the sale but something else. In conceivable cases there may be a distinction between rent on one hand and the consideration for sale of the privilege of occupying a shop or a stall on the other hand. In the instant case I find none. Therefore it can as well be said That what the municipality does by the impugned resolution is to charge rent for a period of 10 years and it calculates it on the basis of the entire cost of construction and 60 % of development charges. Both these courses are permissible for the municipality to adopt. The resolution provides for non-transferability of the premises. Mr. Vakil has controverted this argument. Whether it provides for transferability or not is not a matter of any substance in the present context because the municipality may charge rent and may yet stipulate that the premises shall not be transferable or may be transferred. Similarly it may sell the privilege of occupying a shop for a particular period and may yet stipulate that it shall not be transferable or may be transferred. It is necessary in this context to note the use of the expression privilege in sub-sec. (1) of sec. 208. What the municipality is permitted to sell by public auction or otherwise is the privilege of occupying a stall for a limited period and not the right. I make a distinction between right and privilege because in my opinion privilege is something less than the right. A right to immoveable property may be transferable. A privilege which is generally personal in character is not always transferable. ( 5 ) SO far as the decision of this Court in Babubhais case (supra) is concerned the principle laid down therein cannot be applied to the instant case because what the municipality was attempting to do in that case was to charge both the rent and the cost of construction. Sub-sec. (1) of sec. 208 authorities a municipality to charge rent but not cost of construction. It was on that account that the resolution impugned in that decision was struck down by this Court. If it is permissible for the municipality to charge rent on monthly basis or on annual basis or on the basis of a lease for a fixed period it is open to the municipality to determine rent on any reasonable and rational basis. If it is permissible for the municipality to charge rent on monthly basis or on annual basis or on the basis of a lease for a fixed period it is open to the municipality to determine rent on any reasonable and rational basis. In the instant case that the municipality tries to do is to determine rent for a period of 10 years on the basis of cost of construction and 60 % of development charges. Merely because cost of construction and 60 % of development charges constitute the base for determining the rent payable for a period of 10 years in advance it is difficult to imagine that what the municipality does is to charge something other than rent because public premises which are let out to an individual must fetch rent. One who takes them incurs the liability to pay rent. What I have stated in regard to the basis on which the rent is determined applies with equal force to the determination of consideration for selling the privilege otherwise than by public auction to occupy the shops. I therefore see no infirmity in the impugned resolution which in my opinion is valid and in conformity with sub-sec. (1) of sec. 208 of the Gujarat Municipalities Act. [the rest of the judgment is not material for the report. ] .